Ethereum surpass bitcoin dominant cryptocurrency, but none will replace gold as a safe haven asset, according to Goldman Sachs.

The market capitalization of bitcoin at the moment (July 8, 2021) is 519,920 million euros (613,640 million dollars at the current exchange rate). That of ethereum stands at 216,610 million euros(255,656 million dollars).

The difference is wide, but it can be cut back and make ether become the dominant cryptocurrency. That is, at least, what Goldman Sachs analysts think. In a press release sent last Tuesday, July 6, 2021, they assured that ethereum has the necessary potential to surpass bitcoin in the podium of virtual currencies.

Ethereum surpass bitcoin dominant cryptocurrency

They argue their prediction that ethereum has greater possibilities of real use in the future, thanks, mainly, to the fact that its sustaining network, Ethereum, is the most popular platform for smart contract applications.

Ethereum surpass bitcoin dominant cryptocurrency: If bitcoin has occupied the first place historically, they argue, it is because it was the first to go on the market (in 2009), however, “it lacks the real use options that ethereum does have”, among other things, they estimate, for its slow transaction speed: 7 per second.

Ethereum surpass bitcoin dominant cryptocurrency

After reaching bitcoin (which is immersed in a bearish trend) its highest historical value in mid– April 2021 (54,248.32 euros-64,027. 12 dollars -, according to CoinMarketCap), several crypto experts concluded that bitcoin could unseat gold as a safe haven asset par excellence.

Ethereum surpass bitcoin dominant cryptocurrency: At Goldman Sachs –even if their point that ether will surpass bitcoin is fulfilled– they are sure that no cryptocurrency will pass ahead of gold. They base their belief on the volatility of cryptocurrencies, which will always prevent them from being “a direct competitor to a safe haven asset as safe as gold.”

Gold, they comment, competes with digital currencies just as it does against other risky assets (stocks, commodities...). For them, " gold is a defensive hedge against inflation and cryptocurrencies are a risk hedge." And they refer to direct competition between virtual currencies as one of the reasons why they can never become truly safe assets.

Ethereum surpass bitcoin dominant cryptocurrency

More news:

Why Spain needs to change the saving culture now after the pandemic hangover

The pandemic has made the situation of Spanish savers clear, while previous history also lights its alarm lights: the lack of saving culture can be a problem for the long term. However, there is room for manoeuvre and the trend can be changed.

The panel of experts virtual “households in the post-covid: How should I save and what to invest,” organized by the Observatory of the Family Savings (Foundation Fund Advocacy, and IE Foundation) highlighted where is the problem and what has to change those habits that, on average, have been acquired in the present.

Cipriano Arteche, nicepresident of the Mutual Foundation of the Legal Profession, explained that the latest results of the Savings Observatory confirm the need to improve the financial knowledge of society: “in the current environment they are especially vulnerable”.

According to Maribel Cambón, deputy director of conjuncture and financial stability of the National Securities Market Commission and economic analyst, it is necessary to see what long-term patterns there are, as well as the changes in recent years.

Thus, there would be 2 different periods: until 2008 and from that year. “Even before the great financial crisis we saw very low consumption patterns and high investments in non-financial assets, which generates unbalanced economic growth,” he analyzed.

The fact that investments were mostly directed would have led to an economy that directed parts of its resources to a greater intensity in the labor rather than in capital. "Until 2008 we saw that employment growth was more intense than GDP growth, so productivity was negative,” he said.

An example can be seen with the fact that in Spain the percentage of households that own housing is almost 80%, 15% above the average in the euro zone.

Meanwhile, in Europe, 65% of savings go to non-financial assets. This is a difference, which has been maintained over time. But the part used in financial vehicles also shows the lack of savings culture of Spaniards, since 40% is involved in assets such as deposits, compared to the bet on pension and insurance funds which is 15% in Spain and 30% in the European average.

With this, the panel of experts agreed that the savings are low. In times of crisis it rises for a precautionary reason due to uncertainty, but, despite this increase, it remains very small compared to the rest of the eurozone. ” We are moving from 5% to the current 15%, which are low levels, " Cambón said.

Ernesto Villanueva, director of the microeconomic studies division of the Bank of Spain, explained, of course, that throughout 2020 we have seen how families have cut their spending a lot. "These fluctuations have come because families could not consume or because Spain is more affected by the industries most penalized by the COVID-19 crisis,” he said.

However, on the current basis, he warned that the problem is that the majority of the population does not understand key concepts, which may hamper their aspirations with long-term savings. ” People don't understand what inflation is, so we have to measure to what extent they understand what we do and see the other side of the mirror, " he said.

A change of mentality and more training is needed. It is the consensus of the experts. Fernando Ariza, deputy general director of Mutuality of the Legal Profession, described that disruptive and differential behavior patterns have been observed with the rise of the pandemic.

"We observed, which is the most worrying thing, that there was no savings in Spain, since half of the Spaniards were caught by the pandemic with less than 9,000 euros saved,” he emphasized. That savings are now in checking accounts.

In this sense, one of the solutions, as Ariza said, is to try to channel the fearful savings derived from the pandemic towards provisional or precautionary savings.” This is a saving so that if another crisis arises, it will catch us with a mattress: that is the great challenge that insurance companies have, " Ariza added.

” It is true that once we get out of the pandemic hangover we will find a desire to socialize and consume and that will pick up in the families that have that capacity, which can go against provisional or precautionary savings, " he warned.

For his part, Luis Viceira, George E. Bates professor of investment management at Harvard Business School, said that to change this trend towards more sustainable savings, incentive through tax advantages is necessary.

“In a situation with an inverted pyramid as at present and with the pensions that the social security will be able to pay to Spanish citizens, encouraging long-term savings is very important, " he said.

"Taxation plays, in this line a very important role: in Holland or in the US contributions to retirement plans are traditionally tax-free and promotes savings”, analyzed Viceria.

” We can set limits to make it more progressive and thus foster this culture, " he added.

” We have before us the fact of trying to channel that fearful saving towards a pension or precautionary saving, " Ariza concluded.